401k-style defined contribution system for some federal workers is part of “A Budget for a Better America,” the President’s spending
proposal for fiscal year 2020 that was released last week.
details were vague, it nonetheless raised alarm among federal employee unions
this budget proposal, President
Trump is showing once again that his administration has nothing but
contempt for the health, education, safety, and security of our nation – and a
savage disregard for the federal workforce that keeps our country running,”
said David J. Cox, President of the American Federation of Government
Employees, the largest federal union representing over 700,000 workers.
proposal was part of a number of changes to the federal retirement system, all
of which were previously proposed and rejected by Congressional appropriators.
The defined contribution portion, however, is new.
the changes are meant to slash retirement spending overall, the “defined
contribution system for term employees” is one area of increased outlays of
$913 million over 10 years, according to Government
the changes to federal workers’ non-salary benefits would reduce spending by
$102.5 billion over the next decade,” the site notes, and lists the following
retirement-centric proposals included by the president:
federal workers to contribute 1 percent more toward the Federal Employees
Retirement System defined benefit annuity each year until those payments reach
“50 percent of cost.”
cost of living adjustments for FERS retirees, and it would reduce COLAs for
participants in the Civil Service Retirement System by 0.5 percent. It also
would eliminate the FERS supplement for workers forced to retire before age 62,
when Social Security kicks in.
payments to retirees by basing annuities on the average of workers’ highest
five years of salary, rather than the current highest three years.
plan also revives a proposal to cut the interest rate of the Thrift Savings
Plan’s government securities (G) fund, which “is statutorily set on a weighted
average of all outstanding Treasury investments and last year increased by 2.91
for the original article.